SmartyPig Review – SmartyPig is Smart Banking

by Ryan Guina

SmartyPig is one of the most unique online banks, and I mean that in a good way. What is SmartyPig? In their words, “SmartyPig is a free online piggy bank for people saving for specific financial goals like a wedding, a vacation or a flat-screen TV. Even if your goal is saving for a rainy day, SmartyPig is here to help you reach that goal faster and give you the most money for your money when you get there.”

In a nutshell, SmartyPig is an online bank that offers higher than average interest rates and uses savings goals to keep members engaged.

You choose the savings goal and time line, and Smarty Pig will help you track your progress, give you the motivation to help you reach your target, and makes it easy to have others help you reach your savings goals. Yes, you read that last benefit correctly! Read on – there are more great benefits to opening a SmartyPig account!

While SmartyPig may be the way to go for some, we recommend checking out all your options first. SmartyPig is focused on discrete savings goals, but may not offer interest rates as high as other online banks, such as Discover Savings, or the full-service features of Chase Bank. Read on to learn what differentiates SmartyPig from other online banks..

Smarty Pig Review

What follows is a full overview of SmartyPig – the areas where SmartyPig excels compared to other online banks, and the areas where it falls short.

How SmartyPig Works

SmartyPig is designed for reaching financial goals and you are required to choose a savings goal when you open your SmartyPig account. Once you choose your goal you can set up automatic transfers from another online savings or checking account to your SmartyPig account. These transfers will continue until you reach your savings goal. You can then withdraw your savings via an ACH withdrawal (free transfer to your savings or checking account), a SmartyPig debit card, or you can redeem your savings for discounts of up to 11% on gift cards from major retailers such as Amazon, Travelocity, and more. You can even split your redemptions among several options. Each of these options is free.

Among highest interest rates in US. Right now the interest rate at SmartyPig is among the highest interest rates in the US, and to top it off, your savings are FDIC insured, which means you have nothing to lose by opening a SmartyPig account.

Opening a Smarty Pig account

Unlike most online savings accounts, which simply request your basic personal information and an opening deposit, SmartyPig requires you to actually set a savings goal before you can open your account. No worries, though. You can simply name it “summer vacation,” or “Christmas savings,” and get started.

You will also need the standard personal information required by virtually all financial institutions. You can see which items are required in the photo to the right.

Sharing your financial goals

SmartyPig allows you to share your savings goals with others, not only for moral support, but for financial support. SmartyPig is the only bank I know of which allows others to quickly and easily helps friends and family reach their savings goals. This is a great opportunity for helping kids reach savings goals, or for other reasons.

You can authorize SmartyPig to access your FaceBook or Twitter account to post updates to your wall any time you add funds to your account. This will include a link to your savings goal page which will allow others to donate to your savings goals. Of course, you do not have to use this option, and you can elect to inlcude none, some, or all of your savings goals for the updates. You can opt in or out at any time.

About SmartyPig’s interest rates

SmartyPig offers interest rates among the highest in the US. However, those rates may not be the absolute highest one can earn, andfunds are tied up in a savings goal and may not be accessible as quickly as they may be in other types of accounts.

SmartyPig also used to cap the balance at which one could earn the highest interest rates. For example, balances of $0.00 – $50,000.00 would earn the highest rate, while larger balances would earn a lower interest rate. That is not currently the case, bit the website does note that interest rates may change at any time without prior notice.

SmartyPig Changes Over Time

I opened my SmartyPig in early 2010. Like many other people, I was intrigued when SmartyPig launched – they offered interest rates which were substantially higher than virtually every other bank on the market. Unfortunately, it was unsustainable.

In late 2010, SmartyPig transferred customers’ deposits to BBVA Compass Bank. SmartyPig was forced to decrease interest rates which made their account less competitive given the constraints on their business model.

I closed my SmartyPig account in 2012 (see below for account closing instructions). SmartyPig is still a good option for banking, but I no longer used the account, and when possible, I prefer to have fewer accounts.

In 2016, it was announced that SmartyPig would transfer all account deposits to Sallie Mae Bank. This shouldn’t have any immediate impact on users. But it’s important to know where your deposits are held.

SmartyPig is Smart Banking

SmartyPig offers best in class interest rates, and it is the only bank I know of that offers social funding. Add in great rewards when you reach your savings goals and other benefits and you have a winning combination.

To wrap it up:

  • Higher interest rates
  • Bonuses for gift card redemptions
  • Social funding
  • FDIC insured

Sounds like quite a few benefits worth looking into. Check out the SmartyPig website for more information.

Note: Below are instructions for closing a SmartyPig account. SmartyPig still fills a niche in the banking industry, but it was no longer necessary for my personal needs.

How to Close a SmartyPig Account

The benefits of closing accounts are several, and primarily centered around better knowing where all your funds are so you can more easily account for them. Fewer financial accounts also simplifies planning and organization, tax time (fewer 1099 forms), and more. In short, the fewer financial accounts you have, the better off you probably are in the long run (provided you are meeting all your financial needs of course). I find having fewer financial accounts much easier for organizing all of my tax documents.

The first task when closing a SmartyPig account is to close out all of your active savings goals. The SmartyPig interface isn’t the easiest in the world to figure out the first time you use it, so I included a few screenshots. Since I didn’t want to share my savings goals with the world, I decided to create a new goal – just to close. Enter, the beer fund.

SmartyPig Dashboard - How to close a SmartyPig Account

First step to close a SmartyPig account – close your Savings Goal

Once you click your account, then click the “close goal link above your goal. And no, I didn’t have a plan to save $250 for beer, though that would make for one great fiesta! $250 was the minimum savings goal, and my purpose for creating this account was just to close it for this tutorial (I didn’t want to share my true savings goal!).

Close SmartyPig Savings Goal

Click the Close Goal button

The next step is to choose a redemption option.

Savings Goal Redemption Options:

Reaching your savings goals is what SmartyPig is all about, right? You save until you reach your goal, then you withdraw your money to pay for whatever it was you were saving for. SmartyPig even makes it easier for you to reach certain goals, especially if your saving goal was really a spending goal. For example, let’s look at the redemption options customers are presented with when they are ready to close a goal:

SmartyPig Savings Goal Redempion Options

SmartyPig Savings Goal redempion options – they really want you to spend

The goal redemption options, listed left to right are: retailer gift cards, followed by a SmartyPig Cash Rewards Card, followed by an ACH transfer. Here is the text from their website:

Retailer Gift Cards: Want to get the most bang for your buck? Retailer Gift Cards offer up to 11% cash back savings. Choose from retailers like Amazon, Macy’s, Travelocity, Chili’s and more. You can redeem your entire goal or just a portion. And while you’re at it, you might want to pick up a few as gifts as well.

SmartyPig Cash Rewards Card: Need INSTANT access to the cash in your goal? Want to earn up to 10% cash back at more than 9,000 retailers? The SmartyPig Cash Rewards Card is your best choice. Transfer your whole goal, or just a portion – anytime.

ACH Transfer: Prefer to transfer your balance back to your bank account. You can do that too

When you actually go to redeem your goal, you must accept or decline each of these options as well. Earning a cash savings of up to 11% sounds good to me. So I decided to check out the retail gift cards. Alas, SmartyPig didn’t offer many gift cards to stores I shop at frequently*, so I chose to redeem my savings for an Amazon Gift Card, which offered a cash savings of 3%.

*To be fair, I’m not much of a shopper, so I’m not a good litmus test for the quality of their offerings. I redeemed a gift card a few months ago and SmartyPig was offering savings of up to 14% for retail stores, and it seemed as though there were more options, but I’m sure the type of gift cards and savings vary by availability.

SmartyPig - Reddeming a retail gift card

Save 3% on an Amazon gift card — Woo-hoo!!!

You will notice that I had $50.03 in my account, and the 3% cash savings on the Amazon gift card, left me with a total of $1.53 to do with what I pleased. Once you elect to redeem some or all of your funds for a retail gift card, you then need to decide whether or not you want to redeem some or all of your remaining funds toward The SmartyPig Cash Rewards Card. Since I only have $1.53 remaining on my card, I don’t think I’ll be choosing this option.

So I elected to transfer the remaining $1.53 via an ACH Bank-to-Bank Transfer. It feels kinda funny making an ACH transfer for only $1.53, but there was really nothing else I could do with it.

What’s Left to Close Your SmartyPig Account?

At this point I’m not 100% certain: the SmartyPig FAQ page lists this as their instructions for closing an account: To close one of your accounts or your profile, please first stop and close any existing goals. Once your goals have been closed, contact SmartyPig customer support at support@smartypig.com and we will be happy to assist you. (I’m still awaiting a reply from my e-mail this morning, but they promise to respond within 1 business day). You can also try calling their customer support number: (888) 567-6278.

Pros and Cons Closing Your Account

First, I’m not recommending that everyone close their account. I closed mine because I realized I wasn’t using it, and life in the long run would be more simple with fewer financial accounts. SmartyPig still offers a good interest rate compared to the national average, but they are only about 70% of what the top banks are currently offering. In addition, their account isn’t designed to be used like most online banks with features such as online bill pay, etc. This is simply a savings account with the option of redeeming your savings for discounted gift cards. Since it is limited as a financial account, it is no longer good for my needs.

The primary benefit of keeping your account open is being able to buy discounted gift cards. However, that benefit was outweighed for me because it is easy to save money on every purchase by using online sites like Ebates for online rebates, or Plastic Jungle for discounted gift cards.

Final note: SmartyPig only offers 1099 forms via download, so make sure you print or download all applicable tax information before closing your account so you will have a copy for your records.


Published or updated October 11, 2016.
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{ 10 comments… read them below or add one }

1 myfinancialobjectives

Wow that interest rate is really awesome for accounts under $50,000! I have to admit, I am getting a bit tired of looking at my 1.10% with ING!

I also like the goal aspect of it, as well as the updates for Facebook. They have got an excellent advertising team it seems!

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2 pamela

did you know that once you reach your goal you can STILL add to that account? You don’t need to close it. I reached a goal, decided to see what would happen if I manually tried to add money and it worked. I have since added 4 more times.

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3 Dan

How are they able to double the market rate??

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4 Ryan

I’m not exactly sure, but I believe it is because they limit the highest interest rate to $50,000; anything above $50,000 in deposits reduces the interest rate for the entire account, not just the amount above $50k. Because the deposits are tied to goals, it is somewhat similar to a short term CD. The bank knows that in all likelihood, the deposits will remain within the account for an average of “x” number of days, so they can turn around and lend it at a higher interest rate. A win-win for everyone involved.

The best part is all deposits are FDIC insured and are handled by West Bank from Iowa, a financial institution that has been around since 1893. Edit to add: As of August 1, 2010, SmartyPig will be transferring all current accounts to Compass Bank, which is a larger bank, more capable of handling the growing requirements of SmartyPig’s customer base. You can read more about the change here.

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5 Erik

However, I do not think that they themselves are FDIC insured. Read the fine print.

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6 Ryan

Erik, the SmartyPig accounts are managed by West Bank, a financial institution that has been around since 1893. Based on on everything I have read, the funds are FDIC insured. I am interested to see where it states deposits are not FDIC insured. Edit to add: As of August 1, 2010, SmartyPig will be transferring all current accounts to Compass Bank, which is a larger bank, more capable of handling the growing requirements of SmartyPig’s customer base.

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7 Erik

This article from the NY Times shows how SmartyPig makes money, and also shows they are FDIC insured.

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8 Veronica

Smarty Pig SUCKS – you can’t withdraw partial funds –
if you want to close a goal you can only deposit back into the account the money the account came from even if you have done transactions with other banks with them. Their interface is POORLY DESIGNED – Customer Service were really RUDE too the lady started yelling at me. RUN don’t walk away from Smarty Pig.

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9 Briana

I’ve considered closing my SmartyPig account as well, just haven’t gotten around to it. Also thinking about an ING Direct account for my primary savings.

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10 Ryan

I’ve had an ING Direct account for years now – it’s a great account with many solid features. I also recommend looking into Ally Bank and Discover Bank for their features and interest rates.

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